Tracing and vouching are opposite investigation techniques.
Under the Daubert test, in order for a technique or theory to be called scientific, the
technique or theory should have been published in peer-reviewed scientific journals.
Data that is only logically deleted is protected and can be un-deleted any time before
the user chooses the option to physically delete it.
Internal controls over cash involve daily cash receipts and money received in the mail
from customers.
Schemes for overstating revenues include manipulating inventories and receivables.
Check laundering typically only occurs in small businesses.
Reverse proof means that the investigator must consider the evidence for both sides.
The fraud engagement process is a part of the fraud investigation process.
One specific objective on internal control is ensuring compliance with applicable laws,
regulations, professional rules, and contractual obligations.
The SEC has the power to make and enforce rules under SOX.
A CART team consists of accountants who have the computer and accounting
knowledge to determine criminal activities.
Vehicle, license and boat registrations are all examples of public databases.
Describe some common law crimes.
For income tax purposes, IRS form 9408 must be filed for all fraud losses, along with a
copy of the investigators report.
There are quite a few statutory arguments including the assertion that wages are not
income and that the income tax does not apply to citizens who live in area other than
the District of Columbia and territories such as Puerto Rico because the definition
contained in the Internal Revenue Code does not include states.
Arbitration also involves a neutral third-party, but the neutral third-party is empowered
to issue findings that can be binding on the disputants.
If a manager is ensuring accuracy, integrity and security of their processes, then he or
she is exercising good applications control.
The objective of indirect methods is not to identify specific transactions that could
represent underpayments of tax although in some cases these methods lead to specific
items.
The Committee of Sponsoring Organizations for the Treadway Commission studied
financial statement fraud cases and developed a taxonomy of financial statement fraud
schemes applicable to publicly-traded companies that included Improper Revenue
Recognition and Misappropriation of Assets.
Title X of SOX states that the CEO must sign the corporate tax return.
It is impossible to determine which printer printed a document.
Content and text analyses involve using algorithms to automatically analyze and
interpret the content of documents and conversations but always require human
intervention to interpret the analysis.
Basic elements of the income assignment include identification of the specific legal
property interests to be evaluated.
The enterprise risk management report defines 16 overlapping components.
Many companies in the United States fail each year due to employee fraud.
Consumers are entitled to obtain free credit reports each year from the 3 largest U.S.
credit card bureaus.
Participants in the mediation process can rent a retired judge to help their process.
The simplest way to describe the asset approach to valuation is:
a.Historical cost minus liabilities.
b.Assets minus liabilities.
c.Book value minus liabilities.
d.Market value minus liabilities.
Document Evidence may include:
a. Working papers
b. Computer files
c. Charts and graphs
d.All of the above
The objective of the physical and document review phase is:
a. To build an appropriately sized case file.
b. To become as familiar as possible with the relevant business processes and
individuals involved.
c. To assist in preparation of the engagement letter.
d. All of the above.
Which of the following was an activity that the La Cosa Nostra Crime Group was
involved in?
a.Drug Trafficking.
b.Money Laundering.
c.Murder.
d.All of the above.
For ease of communication, if we were describing Title 26, Subtitle A, Chapter 1,
Subchapter B, Part VI, 179 we would simply referred to as:
a.IRC 179.
b.Title 26, A/1/B/VI/ 179.
c.Title 26A.
d.179 IRC 26.
What is evaluative mediation?
a.A dispute resolution method that involves a neutral third-party neutral third-party who
is empowered to issue findings that can be binding on the disputants, in cases of
binding arbitration. In cases of non-binding arbitration, the neutral person’s findings
serve as recommendations.
b.Court-annexed arbitration programs (CAAPS) are usually mandatory but
non-binding. In federal courts, CAAPS are governed by the Federal ADR Act. Each
state may have its own laws governing CAAPS in state courts.
c.Part of an organization’s overall dispute resolution system. Dispute risk analysis
focuses on identifying possible disputes and their possible impact on the company.
d.A style of mediation in which the mediator actively expresses opinions about the facts
of the case and the reasonableness of the participants’ negotiating positions.
Which is a consideration for reporting a loss to the insurance carrier of the corporation?
a. Can the loss be absorbed into current net profits for the corporation?
b. Can personal assets of the accused be sold to recover the loss?
c. Has the corporation used all reasonable means to mitigate losses?
d. All of the above are considerations.
There are no generally-accepted, published professional protocols available to guide
fraud investigators in conducting investigations because:
a. The laws surrounding investigations of this type do not allow for protocols to be
established.
b.The specific way in which a given investigation is conducted is determined by the
objectives of the investigation.
c. GAAP provides suitable protocols.
d.The American Association of Fraud Examiners currently has protocols being
validated by the U.S. District Court of Appeals.
When a company makes a very large one-time write off, it’s said to take a(n):
a.Aggressive accounting position.
b.Big bath.
c.Earnings smoothing approach.
d.Legitimate discretion approach.
Which of the following is punishable under IRC 7203?
a.Willful failure to make (i.e., file) a return.
b.Willful failure to supply information.
c.Willful failure to pay tax and estimated tax.
d.All of the above.
The Trust Fund Recovery Penalty holds responsible persons accountable. Who are
they?
a.Owners
b.Officers
c.Supervisors
d.All of the above
Financial statement fraud is typically committed when what type of conditions are
present?
a.Small cap stocks, those whose assets are less than $100 million.
b.In companies with lower earnings, in companies with earnings problems, or
downward trends in earnings.
c.Has no audit committee, or none of the audit committee members is highly skilled, or
the audit committee seldom meets.
d.All of the above.
Which of the following is an example of an internal control question that an auditor
may ask?
a.Do you make daily intact deposits of each day’s receipts?
b.Do you restrictively endorse checks “for deposit only?”
c.Do you reconcile bank deposit receipts against credits to accounts receivables?
d.All of the above.
Predication may also mean:
a. Previous accusations against the fraudster.
b. Follow the evidence.
c. Warning signs that should have been seen.
d. All of the above.
The “how” of a fraud scheme are:
a. The possible locations of the fraud.
b. The general functional area or position.
c. The conditions present to commit the fraud.
d.The mechanisms of the fraud.
Compare and contrast 18 USC 96: Racketeer Influenced Corrupt Organizations (RICO),
15 USC 78dd: Foreign Corrupt Practices Act (FCPA) of 1977 and The Sarbanes-Oxley
(SOX) Act of 2002.
Under Section 302, the CEO and CFO must file separate reports that certify:
a.The signing officer has reviewed the report.
b.The report does not contain any untrue statement of a material fact.
c.The financial statements fairly present in all material respects the financial condition
and results of operations of the year.
d.All of the above.
Which of the following best describes a Passive Threat?
a.A hacker destroying the Accounts Payable files.
b.A disgruntled employee destroying the Accounts Payable files.
c.A Vendor destroying the Accounts Payables files.
d.A flood destroying the Accounts Payable files.
An error or omission is considered to be material if:
a.The act was intentional.
b.The results would have affected the judgment of a reasonable user.
c.The act was unintentional.
d.The omission was more than $100,000.
If documents are contested because one or more persons do not believe they are
authentic, they are referred to as:
a.Forensic Evidence.
b.Questioned Documents.
c.Altered Documents.
d.Fraud trigger points.
An example of a repetitious transaction cycle that an AIS could be developed for is:
a.expenditure.
b.production.
c.revenue.
d.All of the above.
Every time cash changes hands within a business, it should be:
a.audited.
b.counted.
c.rebundled.
d.reconciled to a sales total.
The risk of making less-than-optimal decisions in deciding what evidence to collect,
and how to collect it, and how to interpret it is called:
a. Opportunity risk
b. Fraud risk
c.Investigation risk
d. Loss risk
Which of the following would be involved in a scheme involving overstating assets:
a.Inventories.
b.Accounts receivables.
c.Property, plant and equipment.
d.Consignment sales.
If the expert consultant is not expected to testify in a formal trial, how is all pre-trail
work treated?
a.It is treated as if the expert is going to testify.
b.It is subject to discovery.
c.It is treated as if the expert had no part in the pre-trial work.
d.It is not subject to discovery.
The general principle of Benford’s Law is that:
a.If fraud exists, the difference between horizontal analysis figures will be divisible by
9.
b.Ratios will be increased or decreased by one digit if fraud exists.
c.The likelihood that numbers 1, 2, 3, 4, 5, 6, 7, 8, and 9 will appear as the first digit in
numbers occurring in a random data set conforms to a predictable pattern.
d.The likelihood that numbers 2, 4, 6, 8 and 10 will appear as the first digit in numbers
occurring in a random data sets conforms to a predictable pattern.
How many increasing levels of Evaluation Assurance Levels (EALs) are there?
a.1.
b.3.
c.5.
d.7.
Are personal loans allowed to directors and executives?
a.Yes, if they are under $1 million.
b.Yes, if reported in the next quarterly filing to the SEC.
c.Yes.
d.No.
Alterations of documents might include:
a.Added signatures after the document was created.
b.Removal of letters or numbers on a document.
c.Symbols that have been added or removed.
d.All of the above.
To whom does the theory of fraud development lie?
a. The fraud investigator
b. Law enforcement
c. The corporation
d.The attorney
When a systems developer is working with company employees to identify needs and
priorities, he or she is using the:
a.classical approach.
b.business blueprint approach.
c.ERM approach.
d.Six-Sigma approach.
Describe big bath accounting and what would make a company engage in it.
How does forensic accounting differs from other types of accounting?
a.It is a separate field that has no relation to accounting.
b.Forensic Accountants require at least an masters in accounting.
c.Forensic Accountants are more likely to be found dissecting these statements and
obtaining evidence from other sources.
d.General Accountants must hold to subjective evidence whereas forensic accountants
must use objective evidence.
How many steps does the fraud engagement process involve?
a. 6
b. 8
c. 10
d. 6 to 12, depending upon law enforcements involvement
If there is fraud suspected in the bankruptcy proceedings, who is the case turned over
to?
a.U.S. District Court.
b.Department of Justice.
c.U.S. Attorney’s Office.
d.Securities and Exchange Commission.
Describe a data-driven fraud detection model.
Items that include the willful evasion of tax or the willful failure to pay a tax (income
tax as well as other taxes such as estate, gift, and excise taxes), making false statements
on any return that is to be filed with the federal government, or aiding in the preparation
of fraudulent tax returns are all referred to as:
a.Tax evasion crimes.
b.IRC Code Violations.
c.Negligent Fraud.
d.Tax fraud.
Describe at least two methods that vendors could use to fraud a company.
Besides addressing issues such as organized crime and money laundering, what else did
the United Nations Convention against Transnational Organized Crime and its Protocols
address?
a.Drug smuggling.
b.Human slavery and trafficking.
c.Terrorist training.
d.All of the above.
What are some motivators to financial statement fraud?
What was the Window WMF exploit?
Name at least 7 assets that might need appraisal or valuation.
What are some of the benefits of SOX according to President Bush?
An initial decision must be made as to whether it is necessary to immediately intervene
to prevent the perpetrator from continuing with the fraud scheme. What is this concept
called and what are examples of ways to begin it?
How did the FBI catch two of Russia’s best computer hackers?
a.Set up a sting operation in Russia.
b.Worked with the KGB to have them extradited to the United States.
c.Asked them to come work for the FBI in the United States.
d.Caught them going to Florida on vacation.
If there is no question as to the guilt of the interviewee, what approach is best to be
used?
a. Passive
b. Indirect
c. Direct
d. Active
Section 802 of the Sarbanes-Oxley Act of 2002 creates severe criminal penalties
applicable to bankruptcy proceedings. What are they?
District Attorneys are also known as:
a.Prosecutors.
b.Defendants.
c.Jury Foremen.
d.Court Recorders.
How are acceptable audit risk and acceptable detection risk related?